DENVER – The US Olympic and Paralympic Committee expects cuts of up to 20% due to the coronavirus pandemic and warns that a cancellation of the Tokyo Games would be “devastating” for athletes and the organization.
The Associated Press received a copy of a letter CEO Sarah Hirshland sent to executives across the US Olympic world on Tuesday saying that 10% to 20% cuts “are necessary to both the current revenue lag and to compensate for the expected decline ”. expected in the coming years.
The letter was accompanied by questions and answers that dealt with the possibility that the Olympic Games, which are now due to start a year later, in July 2021, could be canceled entirely if the coronavirus is not contained by next summer.
“We need to understand exactly what this opportunity would mean for our organization, so we definitely considered and evaluated it,” the press release said. “The impact of a cancellation would be primarily devastating for our athletes, but also for” our financial health and stability. We would survive such a scenario, but the effects would be severe. ”
While job cuts or wage cuts seem likely among the 500 employees – many at headquarters in Colorado Springs, Colorado – the Q&A states, “We’ll look at broader program, service, and staff costs before considering cuts . ” or vacation. ”
Hirshland said decisions will be made by the end of May.
Most of the 50 USOPC affiliated sports organizations are already affected and face shortfalls in the amounts they receive from the association in the form of grants and other funds to support athletes.
“Instead of trying a simple blanket cut, we will make strategic decisions based on the resources required to continue business-critical programs, services and features,” wrote Hirshland as she told her employees that she was making a 20% pay cut have. and the rest of the leadership team has made at least 10% pay cuts by year-end.
USOPC’s budget runs on four-year cycles, and the biggest splash of money comes in the Summer Olympics, when television payouts around the Olympic world peak. For example, the association brought in $ 195 million more in 2016 than in 2015, with total sales of $ 336 million.
If the Olympics in 2021 go on as planned, the TV money will still arrive – but with a year delay. The delay could adversely affect a marketing agreement USOPC has entered into with the organizers of the 2028 Los Angeles Olympics, which should begin next year. Virtually all Olympic-style marketing deals planned for 2021 will need to be changed, and many that expire in 2020 could be extended.
In the meantime, a complete cancellation of the Games would break new ground for USOPC. This could include tipping into the US $ 200 million Olympic Endowment, a fund financed from the surplus from the 1984 Los Angeles Games.
“We have to keep the ability to deal with things that are becoming much more difficult, for example if the Tokyo games are canceled,” said the Q&A when asked why the USOPC is not using the foundation money now.
National governing bodies have already suffered a major blow, including USA Cycling and USA Track and Field, which are cutting staff and filing USA Rugby bankruptcy. A poll of NGBs estimated that between February and June they would suffer $ 121 million in lost revenue from canceled events, falling membership, and reductions in other revenue-generating activities.
In the Q&A, USOPC confirmed that it is seeking government aid for NGBs and athletes. USOPC, which has not received government funding for a long time, requested funds from the federal government’s loan program to be given to the NGBs. The application was denied, but NGBs were encouraged to apply for their own loans.